Agriculture 

Banking  and  the  Carrier 

BY 

* 

HOWARD  ELLIOTT 
PRESIDENT,  NORTHERN  PACIFIC  RAILWAY 


ADDRESS 


BEFORE  THE 

MINNEAPOLIS  CHAPTER 
AMERICAN  INSTITUTE  OF  BANKING 


MINNEAPOLIS,  MINN. 
April  26,  1913 


Digitized  by  the  Internet  Archive 
in  2017  with  funding  from 

University  of  Illinois  Urbana-Champaign  Alternates 


https://archive.org/details/agriculturebankiOOelli 


cWoLtir 


AGRICULTURE 
BARKING  and  the  CARRIER 


When  your  committee  asked  me  to  speak  before  you  at  this 
meeting*,  I hesitated  about  accepting  your  very  complimentary 
invitation.  I felt  that  it  was  very  difficult  to  bring  anything  to  you 
that  would  give  you  pleasure  after  your  very  good  dinner,  or  con- 
vey suggestion  that  would  be  helpful  in  trying  to  advance  the 
welfare  of  the  great  American  Northwest,  of  which,  and  in  which, 
Minneapolis  and  Minnesota  are  a most  important  part 

I was  asked  to  give  a name  to  what  I might  say,  and  replied  that 
I would  try  to  present  some  facts  about  Agriculture,  Banking  and 
the  Carrier. 


These  three  agencies  are  most  important  in  our  part  of  the 
country.  Upon  the  wisdom  and  energy  with  which  they  are  con- 
ducted, upon  their  co-operation  each  with  the  other,  and  upon  the 
w wise  and  fair  treatment  accorded  them  by  the  public  through  the 
forces  of  Government,  depend  their  success  and  the  continued 
growth  and  success  of  this  great  Northwestern  country. 


THE  AMERICAN  NORTHWEST 

The  American  Northwest  is  a great  empire,  very  young,  but  very 
strong  and  full  of  opportunity  for  the  best  kind  of  human  endeavor. 
Much  has  been  done,  and  great  has  been  the  growth  in  the  last 
thirty  years,  as  some  of  these  figures  will  show : 


3 


Facts  About  the  States  of  the  American  Northwest 


Admitted 
to  the  Union 

Land 

Area 

Area 

Population 

as  a State 

Sq.  Miles 

Acres 

1880 

1910 

Minnesota  . 

..1858 

80,858 

51,749,120 

780,773 

2,075,708 

N.  Dak 

. . 1889 

70.183 

44,917,120 

}i35,i77-! 

r 577,056 

S.  Dak 

. . 1889 

76,868 

49,195,520 

L 583,888 

Montana  . . 

. . 1889 

146,201 

93,568,640 

39459 

376,053 

Idaho  

. . 189O 

83,354 

53,346,560 

32,6lO 

325,594 

W ashington 

. 1889 

66,836 

42,775,040 

75,116*1,141,990 

Oregon  . . . , 

• • 1859 

95,607 

61,188,480 

174,768 

672,765 

Total  . . . . 

619,907 

396,740,480 

1,237,603 

5,753,054 

Railroad  Mileage 

Banking  Capital  (a) 

1880 

1910 

1880  (b) 

1912 

Minnesota  . 

• 3^51 

8,669  $6,539,238  $67,338,460 

North  Dakota 

j1, 225] 

4,201 

■555,363{ 

18,427,504 

South  Dakota 

. 3,947  1 

16,838,792 

Montana  . . 

106 

4,207 

382,700 

18,834,517 

Idaho  

206 

2,178 

126,885 

9,782,696 

Washington 

289 

4,875 

203,533 

37,769,323 

Oregon  .... 

508 

2,284 

640,657 

25,945,979 

Total . . . . 

• 5,485 

30,361  $8,448,376  $194,937,271 

(a)  Banking  Capital  includes  capital,  surplus  and  undivided  profits. 

(b)  National  banks  only. 

A Chance  This  American  Northwest  of  ours  comprises  21% 
for  Growth  of  the  area  of  the  whole  United  States,  but  has  only 
a little  more  than  6%  of  the  population.  The  rail- 
roads have  been  active  in  providing  facilities,  and  there  are  only 
190  people  to  the  mile  of  railroad  as  compared  with  382  people 
for  the  United  States  as  a whole,  showing  that  the  railroads  have 
been  doing  their  share  in  the  development  of.  this  region.  The 
banking  capital,  from  such  figures  as  I have  been  able  to  obtain, 
is  $33.88  per  person  for  all  classes  of  banks  in  the  Northwest, 
and  $18.00  for  National  Banks  only,  as  compared  with  $45.28  for 
all  classes  of  banks  and  $18,98  per  person  for  National  banking 
capital  for  the  whole  country.  The  deposits  in  our  banks  are 
$941,935,000 — not  quite  5%  of  the  total  deposits  in  the  United 


4 


States,  of  $19,663,857,000;  and  the  deposit  per  capita  in  our  part 
of  the  country  is  $164.00  and  $214.00  in  the  United  States  as  a 
whole. 

What  a chance  here  for  growth ! 

AGRICULTURE 

What  Has  I have  spoken  of  Agriculture  as  the  first  of  the  great 
It  Done?  agencies,  the  success  of  which  is  so  vital  to  all,  and 
in  Agriculture  I include  all  forms  of  activity  engaged 
ijn  by  the  farmer. 

It  is  true  that  in  Minnesota,  Montana,  Washington,  Idaho  and 
Oregon  lumbering  is,  and  in  the  four  last  states  for  a considerable 
time  will  continue  to  be,  a most  important  part  of  the  business  of 
the  people.  . 

It  is  also  true  that  in  North  Dakota,  Montana,  Idaho  and  Wash- 
ington, mining  furnishes  a field  for  the  employment  of  labor, 
capital  and  brains,  but  upon  the  wise  and  efficient  use  of  the  soil 
depends,  more  than  upon  all  else,  the  future  prosperity  of  the 
American  Northwest. 

Some  Results  Consider  for  a moment  some  of  the  figures 
from  Agriculture  about  people  engaged  in  agriculture  and  the 
results  obtained  in  the  American  Northwest. 


1880 

1910 

All  land  in  farms  (acres) 

23,561,289 

124,345,917 

Improved  land  in 

farms  (acres) 

11,540,115 

7 2,992,996 

Land  capable  of  being  farmed  and  not 

in  use  (acres) . 

12,021,174 

51,352,921 

Number  of  farms 

i35>97i 

466,856 

1879 

1909 

Bushels 

Value 

Bushels 

Value 

Wheat 

47,842,928 

not 

available 

290,802,582 

$267,708,909 

Oats 

32,919,797 

tt 

252,593,225 

96,305,612 

Barley  

5,048,623 

tt 

97,253,571 

47,696,131 

Corn  

17,020,707 

tt 

130,004,006 

60,400,992 

Flaxseed  

174,300 

it 

18,731,213 

28,031,509 

Total  

103,006,355 

a 

789,384,598 

$500,143,153 

Tons 

Tons 

Hay  and  Forage 

2,420,913 

a 

18,954,653 

$111,154,653 

5 


LIVE  STOCK  ON  FARMS 


1880  1910 

Number  Value  Number  Value 

Cattle  1,607,915  available  7, 150,802  $172,843,915 

Horses  528,321  “ 3.  *39, 1 53  347.783,768 

Sheep  1,885,490  “ 13,078,131  65,923,572 

Poultry  (ah  Fowls)  . 3,345,325  “ 25,333,553  12,150,697 

Hogs  672,315  “ 3,572,890  32,972,560 

Total  8,039,366  “ 52,274,529  $631,674,512 

ORCHARD  FRUIT 

1879  Value $ 857,812 

1909  Value 10,106,702 


POTATOES 

1899  1909 


Acres  276,242  479,024 

Bushels  29,497,186  56,237,161 

Value $ 8,303,259  $19,706,596 

Comparing  These  figures  are  interesting  in  showing  the  de- 
Agricultural  velopment  in  a term  of  years.  When  we  look  at 
Results  with  them  we  are  inclined  to  “pat  ourselves  on  the  back” 
Denmark  and  think  we  have  done  wonders,  for  the  total 
value  of  all  crops,  not  counting  live  stock  and  its 


products,  for  the  last  census  year  in  the  states  comprising  the 
American  Northwest  was  $691,634,435.  This  is  a very  large  sum 
of  money,  equal  to  $120  per  inhabitant,  but  to  only  $5.50  per  acre 
for  all  of  the  farms,  and  to  $9.50  per  acre  based  on  the  improved 
land  in  farms. 

Denmark  with  a much  more  dense  population  of  183  to  the 
square  mile  as  compared  with  a little  over  9 in  the  American  North- 
west, has  so  improved  methods  of  work  and  of  agriculture  that 
the  average  annual  value  for  the  same  classes  of  products  for 
every  acre  in  that  little  kingdom  is  $225.16.  Because  of  the  greater 
density  of  population,  the  production  per  person  averages  $65.33. 


6 


Something  has  been  done  in  the  direction  of  improving  agri- 
cultural methods  in  this  country,  but  these  figures  show  how  far 
behind  we  are  in  making  the  best  and  most  productive  use  of 
our  soil. 

Suppose  that  the  yield  per  acre  on  improved  farms  only  was 
one-half  of  the  average  for  the  whole  of  Denmark,  then  the 
production  from  the  soil  in  the  American  Northwest  would  amount 
to  more  than  $8,000,000,000  of  value,  instead  of  the  present  $691,- 
000,000.  The  addition  of  this  vast  sum  to  the  wealth  production 
of  the  country  north  and  West  of  here  would  mean  much  to  every 
farmer,  every  banker,  every  business  man  and  every  railroad  em- 
ploye in  the  country. 

These  startling  figures  emphasize  that  there  is  a great  responsi- 
bility upon  the  man  engaged  in  agriculture  in  improving  his  effi- 
ciency, and  also  a responsibility  upon  all  in  seeing  that  hand  in 
hand  with  the  development  of  agriculture  must  go  proper  develop- 
ment of  the  banking  and  transportation  interests  of  the  country. 

THE  BANKER 

His  Growth  and  How  about  the  banking  capacity  of  the  Ameri- 
Future  Work  can  Northwest?  The  growth  of  the  banks  in 
the  states  making  up  the  American  Northwest, 
from  less  than  $9,000,000  capital  in  1880  to  $195,000,000  in  1912, 
shows  clearly  that  this  agency  has  been  keeping  pace  with  the 
growth  of  the  country,  and  in  the  whole  United  States  the  growth 
has  been  from  $825,000,000  in  1880  to  $4,164,914,181  in  1912. 

Today  there  are  more  than  3,360  banks  in  the  American  North- 
west, taking  care  of  nearly  $1,000,000,000  of  the  people’s  money 
and  helping  the  farmer,  the  business  man  and  the  railroad  employe 
carry  on  their  daily  lives. 

Taking  the  United  States  as  a whole  the  deposits  have  increased 
from  $2,201,900,000  in  1880  to  $19,663,857,000  in  1912. 

The  banker  in  his  business  meets  many  people  and  has  a chance 
to  direct  attention  to  the  right  way  of  solving  some  of  the  diffi- 
culties that  confront  the  country. 


7 


THE  CARRIER 


The  Carrier  Is  What  about  the  carrier?  What  has  been  ac- 
the  Railroad  complished  in  creating  that  agency  ? In  our  part 
of  the  country,  the  principal  carrier  for  any 
distance  is  the  railroad,  and  to  a very  large  extent  this  is  true  in 
the  United  States  as  a whole.  Without  efficient  railroads  the 
country  cannot  develop  any  more  than  it  can  develop  without 
efficient  agriculture  and  safe  and  sound  banks. 

What  Have  the  Here  are  a few  figures  that  will  show  what  the 
Owners  Done?  owners  of  the  railroad  have  done  in  producing 
a transportation  machine  to  handle  the  people 
and  products  of  the  country : 

The  American  railroad  system  has  been  created  in  its  present 
form  since  the  Civil  War,  and  practically  built  and  rebuilt  within 
the  last  forty  years.  The  railroad  owner  has  provided  in  round 
figures  250,000  miles  of  railroad,  370,000  miles  of  track,  62,000 
locomotives,  51,000  passenger  cars,  and  2,200,000  freight  cars. 

Its  Value,  The  fair  present  value  of  this  tremendous  piece 

Working  Force,  of  machinery  is  probably  at  least  $18,000,- 
Payroll  and  000,000,  and  in  keeping  it  in  order  and  in 

Securities  operating  it  about  1,700,000  men  are  employed 

with  an  annual  payroll  of  nearly  $1,300,000,000, 

The  securities  representing  this  value  are  held  by  hundreds  of 
thousands  of  individuals,  and  also  by  Insurance  Companies,  Savings 
Banks  and  Trust  Companies,  Hospitals,  Churches  and  Colleges, 
and  the  people  as  a whole  have  as  vital  an  interest  in  maintaining 
the  credit  and  prosperity  of  the  railroads  as  they  have  in  maintain- 
ing the  solvency  of  the  banks. 

It  is  stated  on  good  authority,  that  the  Life  Insurance  Com- 
panies doing  business  in  the  State  of  New  York  hold  one-eighth 
of  the  entire  railroad  bond  issues  of  the  country.  There  are  about 
20,000,000  policy  holders  in  these  companies  and  they  are  very 
much  interested  in  the  soundness  of  this  great  investment.  There 
are  16,108  holders  of  Northern  Pacific  stock,  of  which  5,675,  or 
35%  are  women,  and  presumably  the  same  relation  obtains  in  other 
large  railroads. 


Business  Handled  This  great  piece  of  machinery  handled  last 
in  One  Year  year  33,510,673,000  passengers  one  mile, 

and  carried  267,313,687,000  tons  of  freight 
one  mile.  These  figures  are  so  vast  that  the  human  mind  can- 
not understand  them.  But  assuming  that  there  are  92,000,000 
people  in  the  United  States,  it  means  that  the  railroads  pro- 
vided a trip  of  364  miles  and  that  they  hauled  2,905  tons  of 
freight  one  mile  for  every  man,  woman  and  child  in  the  United 
States. 

People  from  all  over  the  world  come  to  examine  the  Amer- 
ican railroads  and  the  American  railroad  system  and  go  away 
in  wonder  because  the  American  railroads  perform  a greater 
service  per  mile  of  track  than  those  of  any  other  nation,  at 
lower  rates  and  pay  their  employes  higher  wages. 


Comparison  of  Rates, 
Capitalization  and  Wages 
with  Foreign  Nations 

are  obtainable : 


The  following  are  the  average  rates 
per  ton  per  mile  for  handling  freight 
in  some  of  the  important  countries 
for  the  last  years  for  which  figures 


United  Kingdom 

Germany 

France 

Russia  

Austria 

Hungary  

Denmark  

Holland 

Switzerland 

United  States.... 

and  here  are  some  figures  for  capitalization  per  mile  of  road : 


United  Kingdom $275,000 

Germany 1 14,000 

France  144,000 

Russia,  including  Siberia 81,000 

Austria  118,000 

Hungary  67,000 


2.33  cents 
1.41  “ 

i-39  “ 
•95  “ 
145  “ 
I-3I  “ 
2.16  “ 
1.32  “ 

2.91  “ 

.741  “ 


9 


Denmark  58,000 

Holland 82,000 

Switzerland 117,000 

United  States 60,000 

and  here  are  the  average  wages  paid  railroad  employes  per  year: 

United  Kingdom $270 

German  Empire 388 

France « 260 

Russian  Empire 196 

Austria 277 

Hungary 283 

Italy 287 

Switzerland  292 

United  States 733 


New  Capital  People  who  do  not  study  the  figures  often  look 
Not  Attracted  upon  the  railroad  as  a great  piece  of  machinery 
to  Railroads  with  an  unlimited  ability  to  obtain  money  in 
indefinite  amounts  for  increasing  its  capacity 
and  improving  the  quality  of  the  service.  The  transactions  are 
so  large  and  the  figures  run  into  so  many  millions  that  the 
impression  prevails  that  the  railroads  must  be  very  rich,  and 
that  any  failure  or  refusal  of  the  management  to  do  the  things 
that  people  want  done  is  due  to  an  unwillingness  and  to  a 
spirit  of  parsimony,  when  as  a matter  of  fact  it  is  because  of 
the  absolute  inability  of  the  owners  and  managers  to  obtain 
the  money  from  any  source  whatsoever. 

Equipment  of  The  equipment  of  the  railroads  alone  repre- 
Railroads  and  sents  at  least  $3,500,000,000,  and  that  equip- 
Its  Cost  of  ment  must  be  maintained  in  good  order,  that 

Maintenance  it  may  perform  the  duty  imposed  upon  it  by 
the  public.  It  must  be  improved  in  quality  and 
quantity  year  by  year. 

The  imagination  of  the  people  is  fired  by  the  building  of 
the  Panama  Canal,  and  it  is  thought  of  as  a great  work,  but 
the  railroad  equipment  for  the  use  of  the  people  is  worth  at 
least  eight  times  the  cost  of  that  canal,  and  the  annual  cost 


10 


of  repairing  and  replacing  that  equipment,  about  $446,000,000 
in  1912,  is  as  much  as  the  cost  of  the  canal. 

To  maintain  a high  standard  of  equipment  for  the  use  of 
the  American  people  is  fully  as  important  as  to  have  the 
Panama  Canal,  and  yet  rarely  is  any  suggestion  made  to  en- 
courage the  railroads  in  the  work  they  are  trying  to  do  and 
in  helping  them  to  make  a better  use  of  that  equipment,  or  in 
helping  them  to  obtain  rates  that  will  enable  them  to  have 
adequate  facilities  and  adequate  equipment  for  the  fast  grow- 
ing business  of  the  country. 

Accidents  and  The  railroads  are  struggling  all  the  time  to  per- 
Their  Causes  form  their  work  with  less  loss  and  damage  to 
life  and  property,  and  few  people  not  in  the 
business  realize  the  vast  capital  expenditures  that  should  be  made 
in  order  to  equip  the  railroads  with  modern  safety  appliances  that 
help  to  prevent  accidents.  Such  appliances  will  not  entirely  stop 
accidents,  because  in  the  last  analysis  the  human  equation  is  the 
test,  and  only  until  public  opinion  holds  to  a rigid  account  railroad 
officers  and  employes  who  are  unfaithful  to  their  duty,  will  acci- 
dents be  minimized  in  spite  of  all  the  appliances  that  modern  science 
may  adopt. 

Statistics  show  that  about  one-twelfth  of  the  accidents  on  the 
American  railroads  are  due  to  causes  that  can  be  remedied  by 
mechanical  appliances  for  the  protection  of  trains ; the  other  eleven- 
twelfths  flow  from  causes  that  are  common  to  all  classes  of  business. 

Accident  Figures  Much  has  been  said  about  accidents  in  this 
Compared  with  country  as  if  we  were  very  far  behind  other 
Other  Countries  countries  in  this  respect.  Look  at  the  figures 
for  a moment : 

In  Europe  on  206,987  miles  in  1910  there  were  killed  554 
passengers,  2,607  employes  and  4,465  other  persons,  or  a total  of 
7,626.  In  the  United  States  on  248,888  miles  reported  in  1912, 
there  were  killed  318  passengers,  3,235  employes,  and  6,632  other 
persons,  or  a total  of  10,185.  Included  in  the  figures  for  the 
United  States  were  5,434  trespassers,  and  it  is  well  known  that  in 
most  European  countries  the  public  realize  they  have  no  right  to 


11 


trespass  on  railroad  property,  while  in  this  country,  except  in  a 
few  states,  people  think  the  railroad  right  of  way  can  be  used  as  a 
highway,  with  the  result  that  there  are  about  14  trespassers  a day 
killed  in  the  United  States.  These  trespassers  not  only  lose  their 
own  lives,  but  they  endanger  most  seriously  the  lives  of  the  employes 
and  passengers  on  the  trains. 

Absolute  obedience  is  not  encouraged  enough  in  American 
education,  or  in  the  American  home,  and  in  spite  of  everything 
that  railroad  managers  can  do,  it  is  very  difficult  to  have  absolute 
obedience  to  reasonable  rules. 


Block  Signals  Nearly  $300,000,000  is  needed  to  install 

a Help  in  suitable  block  signals  on  the  American 

Preventing  Accidents  railroads,  which  means  an  annual  charge 

for  maintenance  and  depreciation  of 

about  $75,000,000. 


What  Becomes  of  The  revenue  of  the  railroads  is  collected 
Railroad  Earnings?  in  the  main  from  the  handling  of  property 
and  passengers,  and  it  cannot  pay  out 
more  than  it  takes  in.  In  1912,  out  of  every  dollar  that  the 
railroad  received,  the  following  disposition  was  made : 


Labor  direct 

Fuel  and  Oil,  70%  labor 

Material,  Supplies  and  Miscellaneous  Expenses.. 

Loss  and  Damages 

Taxes  

Rents  for  Leased  Roads 

Interest  on  Debt 


44.17  cents 

8.93  “ 

14.06  “ 

2.20  “ 

4.21  “ 

4.41  “ 

1343  “ 


Total  91.41 

Balance  8.59 


100.00 

Of  this  balance  3.75  cents  was  for  betterments  and  deficits, 
and  4.84  cents  for  dividends.  In  other  words,  of  the  dollar 
collected  there  had  to  be  paid  out  91.41  cents  for  those  things 


12 


that  were  absolutely  necessary  for  maintaining  and  operating 
the  property,  paying  taxes  and  interest,  leaving  only  the  small 
balance  of  8.59  cents  for  improvements  and  dividends. 


Increasing  Costs  Without  effective  banking  the  great  railroad 
Make  Problem  systems  of  the  country  could  not  have  been 

of  Railroads  developed  to  the  extent  that  they  have  been, 

More  Difficult  and  one  of  the  great  problems  confronting  the 
carriers  today  is  that  of  making  both  ends 
meet,  and  having  enough  money  left  over  so  that  bankers  will  be 
able  to  obtain  from  investors  new  funds  to  increase  the  facilities. 

It  is  a matter  of  common  knowledge  and  evident  in  the  lives 
of  all  of  us  that  expenses  and  the  cost  of  living  are  greater  today 
than  a few  years  ago,  and  the  same  causes  that  affect  the  individual 
affect  the  great  transportation  compnies. 

The  demands  of  labor,  the  increased  cost  of  material,  ever- 
growing taxes,  many  new  federal  and  state  laws  unnecessarily 
increasing  the  payroll,  requirements  of  prosperous  people  for  better 
service,  all  tend  to  increase  the  railroad  expense,  but  so'  far  with 
no  increase  in  rates. 

As  a result,  the  balance  left  to  pay  a return  upon  investments  is 
not  the  amount  that  it  should  be  to  enable  the  banker  to  say  to  his 
client,  “Lend  me  your  money  that  I may  furnish  it  to  the  railroads 
so  they  can  go  on  with  their  work.” 

Increased  Capital  Produces  Figures  compiled  from  the  reports 
No  Improved  Returns  of  the  Interstate  Commerce  Com- 

mission for  the  fiscal  years  1907  and 
191 1 are  given  below : ign  190 7 

Cost  of  road  and  equipment.  . . *$14,984,796,837  $12,940,379,220 

Revenues  2,852,854,721  2,570,795,058 

Expenses  2,005,528,462  1,737,698,201 

Balance  847,326,259  833,096,857 

Taxes 102,657,157  79,640,013 

Operating  income 744,669,102  753,456,844 

Increased  cost  of  road  compared 

with  1907 2,044,417,617 

Decrease  in  income 8,787,742 

*Cost  taken  from  balance  sheets  are  far  less  than  present  real  value. 

13 


In  other  words,  with  $2,000,000,000  new  capital  put  into  the 
business  there  was  nearly  $9,000,000  less  return.  How  long  will 
people  go  on  putting  money  into  a business  that  makes  no  return 
on  the  new  capital  required? 

COMPARISON  OF  RETURNS 

On  Agricultural  In  1900  the  value  of  farm  property  in  the 


Capital  states  of  the  American  Northwest  was  $1,843,- 

409,554,  and  in  1910  it  was  $5,436,255,070,  an 
increase  of  194.9%. 

1900  1911 

Minnesota  $788,684,642  $1,476,41 1,737 

North  Dakota 255,266,751  974,814,205 

South  Dakota 297,545,302  1,166,096,980 

Montana  117,859,823  347,828,770 

Idaho  67,271,202  305,317,185 

Washington  144,040,547  637,543,411 

Oregon  172,761,287  528,243,782 


$1,843,409,554  $5,436,256,070 

The  capital  value  represented  by  Agriculture  for  the  United 
States  for  1910  was  estimated  at  $40,991,449,000,  and  the  re- 
turns from  Agriculture  for  various  periods  are: 

13.8%  in  1890 
16.3%  in  1900 
16.8%  in  1905 

The  farmer  of  the  American  Northwest  has  prospered  as 
much  as  in  any  other  section  and  his  property  has  increased 
largely  in  value,  and  presumably  'he  has  made  as  handsome  a 
return  on  that  value  as  for  the  average  of  the  United  States. 

On  Banking  The  capital,  surplus  and  undivided  profits  of  all 
Capital  the  banks  of  the  United  States  for  1912  are  given 

as  $4,164,914,181.  The  net  earnings  in  the  same 
periods  for  national  banks,  and  not  including  state  and  private 
banks,  which  are  said  to  do  as  well,  if  not  better  than  national 
banks,  have  been,  based  on  capital  and  surplus: 


14 


6.66%  in  1880 
8.63%  in  1890 
8.20%  in  1900 
9.67%  in  1910 

Or,  if  based  upon  capital  alone,  the  net  earnings  have  been : 

8.36%  in  1880 
11.48%  in  1890 
11.60%  in  1900 
16.00%  in  1910 

On  Railroad  The  capitalization  of  the  railroads  in  1910  repre- 
Capital  sented  by  securities  in  the  hands  of  the  public 

was  $14,338,575,940.  The  return  on  capital  in- 
vested in  railroads  was  investigated  carefully  by  the  Railroad 
Securities  Commission,  with  President  Hadley  of  Yale  at  the 
head,  whose  report  was  sent  to  Congress  by  the  President  on 
December  8,  1911.  What  the  Commission  says  in  that  report 
tells  the  story: 

“Neither  the  rate  of  return  actually  received  on  the  par 
value  of  American  railroad  bonds  and  stocks  today , nor  the 
security  which  can  be  offered  for  additional  railroad  invest- 
ments in  the  future,  will  make  it  easy  to  raise  the  needed 
amount  of  capital. 

“ The  rates  of  interest  and  dividends  to  outstanding  bonds 
and  stocks  of  American  railroads  is  not  quite  four  and  one- 
half  per  cent  in  each  case 

And  again : 

“A  reasonable  return  is  one  which,  under  honest  accounting 
and  responsible  management,  will  attract  the  amount  of  in- 
vestors' money  needed  for  the  development  of  our  railroad 
facilities.  If  rates  are  going  to  be  reduced  whenever  dividends 
exceed  current  rates  of  interest,  investors  will  seek  other  fields 
where  the  hazard  is  less  or  the  opportunity  greater .” 

To  quote  again  from  this  report: 

“The  necessary  development  of  railroad  facilities  is  now 
endangered  by  the  reluctance  of  investors  to  purchase  new 


15 


issues  of  railroad  securities  in  the  amounts  required.  This 
reluctance  is  likely  to  continue  until  the  American  public  under- 
stands the  essential  community  of  interest  between  shipper  and 
investor , and  the  folly  of  attempting  to  protect  the  one  by 
taking  away  the  rewards  of  good  management  from  the  other.” 

The  evidence  all  indicates  that  the  returns  upon  capital 
invested  from  both  Agriculture  and  Banking  have  been  much 
more  attractive  to  the  investor  than  have  the  returns  upon 
capital  advanced  to  the  carrier,  and  the  Securities  Commission 
points  out  very  clearly  that  the  returns  upon  railroad  invest- 
ment are  not  enough  to  attract  the  needed  capital. 


What  Can  Be  Done  to  I have  tried  to  give  you  a few  of 
Increase  the  Efficiency  of  the  important  facts  about  Agricul- 
These  Three  Factors?  ture,  Banking  and  the  Carrier, — 

^ the  A,  B,  C of  the  alphabet  of  prog- 
ress in  the  American  Northwest.  If  these  three  agencies  are 
not  efficient  and  progressive,  then  there  will  be  indifferent 
progress  in  merchandising,  manufacturing,  and  in  the  develop- 
ment of  the  more  complex  forms  of  human  effort  that  do  not 
flourish  until  there  is  some  surplus  of  brains,  energy  and  cap- 
ital over  and  above  the  imperative  needs  of  the  simpler  forms 
of  business. 

Following,  and  to  some  extent  coincident  with  the  success 
of  this  A,  B and  C,  come  the  things  every  man  works  for,  and 
hopes  for — better  homes,  better  care  of  women  and  children 
in  schools,  hospitals  and  churches,  and  better  facilities  for  the 
general  welfare  and  uplifting  of  society.  We  all  of  us  want 
these  things,  and  we  all  want  agriculture,  banking  and  the  car- 
rier to  go  on  with  their  work,  and  to  succeed.  The  practical 
question  is,  What  can  any  one  of  us  do  to  help  out,  that  we  are 
not  doing? 


16 


Banker  Has  Been  It  is  gratifying  that  the  country  gener- 
Helprng  the  Farmer  ally  is  awakening  to  the  fact  that  agri- 
. culture  is  an  occupation  that  needs  the 

£ M entl°nranK  beSt  brainS  that  Can  be  £iven  to  it.  and 
the  Minneapolis  bankers  have  been  giving  praiseworthy  atten- 
tion to  the  problem.  Too  long  has  the  farmer’s  life  been  pic- 
tured as  unattractive,  unremunerative  and  something  that  the 
young  men  and  young  women  should  shun.  Lately,  however 
the  Government,  the  bankers,  the  carriers  and  people  gener- 
ally  have  awakened  to  the  fact  that  it  is  important  to  improve 

5X  farm tl0nS  °"  ^ ^ t0  increase  the  productivity 

i i Prog,ress  has  been  made,  but  much  remains  to  be  done  to 
ielp  and  encourage  the  farmer  and  his  family  and  to  increase 
the  product  from  each  acre. 

£SetRHatBeen  f°r  many  years  the  attention  of  thought- 
Helping  the  Banker  ful  men  has  been  directed  to  our  mon- 

t , etary  Policy  and  the  mantle  of  govern- 

ment protection  has  been  thrown  around  our  banking  methods 

business'7  tT  6 made  t0  Safeguard  that  important 

■ 1 Ih,  are  some  weak  spots  in  our  system  which  it 

is  hoped  will  be  cured  in  due  time. 


EncouraMncr  thlrd  g’eat  agency>  that  of  the  carrier,  has 

RMlroadf  f°r  f4°  years  struggled  to  create  a good  trans- 

lroads  portation  machine,  much  of  the  time  without 

helpful  support  from  either  the  public  or  the 
Government,  and  of  late  years  in  the  face  of  restrictive  and 

fcnt1  tL  eftShatl°ni,'  I11"4  the  bUSineSS  haS  succeeded  to  the 
ihl  TT  fh  a c haS’  haS  been  due  to  the  wonderful  growth  of 
e United  States,  which  has  carried  forward  all  classes  of 

usiness  to  a fair  and  in  some  cases  a high  degree  of  prosperity. 

3eVeinte?ensetedh°Uld  iS  COnfronting  ‘he  Amer- 

interested  man  people  that  is  just  as  important  to 

• , their  future  welfare  as  is  the  success  of 

ignculture,  or  of  our  monetary  system.  success  of 


17 


When  the  silver  question  was  rampant,  many  people  said 
they  did  not  care  about  that,  because  it  was  a question  for  the 
bankers  and  it  did  not  affect  them;  they,  however,  learned 
later  on  that  the  policy  of  our  financial  system  affected  every 
man  from  one  end  of  the  country  to  the  other. 


Fair  Treatment  Many  people  say  now  that  in  some  miracu- 
to  the  Railroads  lous  way  the  railroads  are  going  t p 

all  the  facilities  that  are  necessary  for  the 
expanding  country,  and  that  it  is  their  business  to  get  the 
money  spend  it,  and  have  adequate  facilities.  The  mabi  y 

or  failure  in  providing  these  facilities  win  sooner  or  later  affec 

every  one  from  one  end  of  the  country  to  the  other,  and  it  i 
just  as  much  to  the  interest  of  the  farmer,  the  banker  and  the 
business  man  to  see  that  fair  treatment  is  accorded  to  the  rail 
roads  so  that  money  will  be  attracted  to  that  business,  as  1 
to  have  sound  agricultural  practice  and  a sound  banking  po  icy. 

Need  of  Men  There  is  one  feature  of  railroad  operation  that 
^ Character  is  not  often  considered,  and  that  is  the  question 

and  Ability  of  manning  this  great  machine.  There  are  many 

high-minded,  earnest  men  in  all  departments  of 
railroad  work  who  are  giving  the  best  that  is  m them 1 m trying 
to  do  their  duty  to  the  owners  of  the  proper  y an 


\ 


It  is  an  unfortunate  fact,  however,  that  of  late  years  young 
men  in  the  United  States  who  are  fortunate  enough  to  be 
trained  in  the  best  schools  and  colleges  for  business  and  pro- 
fessional life,  and  who  have  the  liberty  of  choice  in  select,  g 
their  life  work,  do  not  select  the  transportation  business 
thT  the  supply  of  trained  railroad  officers  is  not  as  great  as 
th,hoiid  be”  the  magnitude  oi  .he  busmesa  EnP«™»  «d 
r Vn’o-h  character  in  the  management  of  the  railroads  giv 

if  progress  in  the  right  direction  is  to  be  made. 


It  is  verv  much  to  the  interest  of  the  future  growth  of  the 
it  . , ctates  to  have  the  railroad  business  offer  such  rewards  t 

Sf—  .«  X «m  flow  freely  into  building  up  .he  ...ns- 


18 


portation  machine,  and  to  offer  such  attractions  to  the  best  talent 
of  the  country,  that  men  will  engage  in  the  business  as  freely  as 
they  engage  in  banking,  in  law,  in  medicine,  in  manufacturing 
and  in  agriculture. 

There  is  the  closest  connection  between  the  railroads  and 
the  bankers,  because  the  railroads  must  turn  to  the  banking 
fraternity  to  help  them  in  getting  funds  to  carry  on  the  great 
work  of  providing  sufficient  transportation  for  our  American 
Northwest. 

Tribute  to  There  has  just  passed  away  one  of  the  great 

Mr.  J.  P.  Morgan  bankers  and  one  of  the  great  men  of  the 
world — I refer  to  Mr.  Morgan.  The  railroads 
of  this  country,  and  particularly  the  road  I happen  to  represent, 
and  the  country  that  it  serves  owe  much  to  Mr.  Morgan,  for  by 
his  character  and  courage  and  because  of  the  respect  that  investors 
had  for  his  opinion,  he  was  able  to  reorganize  and  finance  the 
Northern  Pacific,  and  put  it  on  its  feet  at  a time  when  the  outlook 
in  the  country  was  not  encouraging. 

His  ability  to  inspire  confidence  and  to  obtain  money  meant 
much  for  the  development  of  the  Northern  Pacific  which  was  the 
pioneer  carrier  through  the  American  Northwest.  His  life,  his 
courage,  his  faith  in  the  country,  and  his  spirit  of  co-operation 
exemplify  what  can  be  accomplished  by  the  proper  relation  be- 
tween the  banker  and  those  he  is  trying  to  serve. 

Duty  of  Is  it  not  your  interest  as  bankers  to  try  to  so  shape 
the  Banker  public  opinion,  that  not  only  will  the  particular  busi- 
ness in  which  you  are  engaged,  receive  fair  treat- 
ment, and  agriculture  receive  help  and  fair  treatment,  but  that  the 
great  business  of  the  carrier  receive  like  encouragement  and  fair 
treatment,  so  that  the  capital  now  invested  in  that  important  busi- 
ness and  needed  so  much  in  the  future,  will  receive  a return  suffi- 
cient to  justify  you  in  recommending  and  obtaining  the  funds  to 
be  used  for  expanding  the  facilities  of  this  great  country? 

I believe  that  it  is,  and  that  everyone  can  do  something  in  his 
own  life  to  foster  a better  understanding  and  a saner  public  opinion 
about  these  questions  so  vital  to  all. 


19 


